Alarm.com Holdings, Inc. earnings

Management highlights

- Steve Trundle noted first quarter results exceeded expectations with SAS and license revenue up and adjusted EBITDA at $49.6 million. - Impact of extreme cold weather in January and February on new home building and installation activity, which then bounced back. - Supply chain volatility related to memory availability and cost increases for memory used in cameras and other products. - Commercial business including Alarm.com for Business, OpenEye, etc. is growing with security and access control moving to cloud-based AI-driven solutions. Energy Hub is a growth contributor. Core residential business has high revenue retention. - OpenEye released AI Visual Check and AI Visual Search capabilities. - Board authorized $150 million share repurchase over next two years. - Non-GAAP profitability metrics updated to exclude mark-to-market gains/losses on equity positions

Guidance

- Second quarter 2026 SAS and license revenue expected $185.5M - $185.7M. - Full year 2026 SAS and license revenue raised to $749.5M - $750.5M. - Total revenue outlook for 2026 is $1.0595B - $1.0705B. - Modest reduction in hardware midpoint due to Supreme Court ruling on tariffs and memory market turbulence. - Non-GAAP adjusted EBIT outlook for 2026 raised to $215M - $216M. - Non-GAAP adjusted net income projected $151.5M - $152M, EPS $2.81 - $2.82. - Full-year 2026 stock-based compensation expense $35M - $37M

Segment performance

SAS and license revenue in the first quarter was $181.5 million, up 10.8% year over year. Hardware and other revenue totaled $83.7 million, up 11.5% year-over-year. Total revenue grew 11% year-over-year to $265.2 million. Non-GAAP adjusted EBITDA in the quarter was $49.6 million. GAAP net income in the first quarter was $23.6 million, while non-GAAP adjusted net income was $34.7 million and earnings per diluted share was 65 cents. For the second quarter of 2026, SAS and license revenue is expected to be between $185.5 million and $185.7 million. For the full year 2026, SAS and license revenue outlook is raised to between $749.5 million and $750.5 million, and total revenue outlook is between $1.0595 billion and $1.0705 billion

Risks & headwinds

- Supply chain volatility regarding memory availability causing cost increases for memory used in products. - Impact of Supreme Court ruling on hardware revenue as tariffs change

Analyst Q&A

• Q: With the wide beat on the SAS and license line, what drove it?

  A: Revenue retention rate was over 95.4%, which is unusually high, and a bit of energy hub revenue moved from the third quarter to the first quarter.

• Q: About the competitive environment for the OpenEye business in the commercial space?

  A: Purchasing behavior has changed, pipeline is solid, customers are looking at products through an AI lens.

• Q: Gross margin profiles across growth segments?

  A: SAS gross margins in the Alarm.com segment are about 87 - 88%, and the Energy Hub segment was closer to 60% in Q1 but likely to be 65 - 70% long term.

• Q: For R&D, still expect it to be roughly flat as a percentage of revenue in 2026?

  A: Yes, see it roughly flat as percentage of revenue for remainder of 2026.

• Q: On Energy Hub, how do you see the number of utility partners and wallet share growing?

  A: Over 155 utilities in the program, working with 75 - 77 million meters out of 130 million, focusing on driving up enrollment.

• Q: Synergies between Energy Hub and security business?

  A: Natural synergy on R&D and channel side, security including energy security, more synergy to develop over time